The Downsides of Debt (and How to Avoid Them!)
Borrowing money can enable people to purchase a home, build a business, and finally live life on their terms. Unfortunately, if you do not approach debt, including credit card debt, wisely, your habits can derail your financial stability and dreams for the future!
If you are in more debt than you can afford to pay off in a timely manner, you could be:
Negatively Affecting Your Credit Score: A large amount of credit card debt can lower your credit score if it goes unpaid for a significant period of time. Similarly, if you are unable to repay a loan on time and according to the terms of your lender, your score may be adversely affected. In order to start rebuilding your credit, stop borrowing money. Put down your credit cards. Push yourself to pay higher than your minimum payment each month. Consider making payments throughout the month, instead of every thirty days. Make your payments on time! Responsible debt repayment habits will help build your credit score.
Decreasing Your Savings Power: Most borrowed funds eventually are subject to interest charges. Interest not only shrinks your monthly spending power; it also reduces how much money you have available to save. Don’t let interest charges jeopardize your emergency fund or slow down your retirement progress. The quicker you pay down a debt, the less interest you will be asked to pay in the long-run!
Tying Yourself to Additional Stress: We all have enough on our plates! Bills and due dates can be a stressful addition to an already hectic mix. If the size or strain of your debts is a source of anxiety, reach out for help. Consider talking to a financially savvy mentor. They can discuss how they have dealt with debt-related stress. In some cases, you may be able to contact your lender to reschedule your repayment date or adjust the repayment amounts.
Lessening Your Chance of Good Interest Rates: If you have a solid credit score, you are more likely to receive lower interest rates and more ideal terms on future car and home loans. The reverse is true as well; a lower credit score can result in higher interest rates. In some cases, a low credit score will lead to an outright denial from a lender. Your credit score may also be a factor when applying to rent a living space. If you are struggling to get control of your debt and increase your credit worthiness, consider increasing your earning power. Pursue an additional source of income to help you get back on track, now and in the future!
If you are trying to repay or avoid debt, we can help. Find more healthy habits and ways to build your financial foundation at the Syncis Money Blog today.
